When does a contractor need a license?
In California, almost any construction job needs a licensed contractor. The small-job exception is narrow: work under $1,000 in total (labor and materials) can be done without a license only if the job doesn’t need a building permit, the person doing it doesn’t employ anyone to help, and they don’t advertise themselves as a contractor. A bigger job can’t be split into smaller contracts to stay under the limit (Business and Professions Code §7048). The CSLB puts it plainly: the limit went from $500 to $1,000 in 2025, “but there is a catch: the work cannot require a permit, and the unlicensed person cannot employ anyone for the project” (CSLB bulletin).
The CSLB also notes that “any project needing a permit or workers requires a licensed contractor” (CSLB brochure).
Check the license before you sign
Look up the license number on the CSLB website, or call the CSLB at 1-800-321-CSLB (2752). The lookup shows whether the license is active and what it covers. Check a few things while you’re there:
- Workers’ compensation. “In California, if a contractor has employees, they are required to carry workers’ compensation insurance,” and that information is on the license history page (CSLB). Some trades must carry it even with no employees.
- The license bond. Licensed contractors must have a $25,000 bond, but the CSLB warns it “is often not enough to cover multiple complaints” and that bonds “do not assure the financial or professional integrity or competency of a contractor” (CSLB).
- Salespeople. Anyone selling home improvement work for a contractor must be registered with the CSLB as a Home Improvement Salesperson. The CSLB suggests asking to see the registration card along with a picture ID.
Get bids and references
The CSLB’s advice: “Get at least three written bids on your project” and “do not automatically accept the lowest bid.” Its homeowner checklist also asks whether you got at least three local references (CSLB checklist). Compare bids on scope, materials and schedule, not only price.
What the contract has to include
For home improvement work over $500, California requires a written contract, signed before work starts (B&P §7159). It must include the contractor’s name, business address and license number, and the salesperson’s name and registration number if one was involved. The contract must also include the required notices, including your right to cancel.
Put changes in writing too. If the scope, price or schedule changes after you sign, get it on paper before the extra work is done.
How much to pay up front, and when
- Down payment: “The down payment cannot be more than $1,000 or 10 percent of the contract price, whichever is less,” and there are “no exceptions for special-order materials” (CSLB).
- Progress payments: after the down payment, a contractor may not ask for or accept more than the value of the work done or materials delivered (B&P §7159.5). The CSLB’s checklist puts it simply: “pay only as work is completed and not before.”
Your right to cancel
Home improvement contracts come with a written notice of your right to cancel. Under that notice you can cancel by midnight of the third business day after you received a signed and dated copy of the contract (B&P §7159); for senior citizens it’s the fifth business day (Civil Code §1689.6). The CSLB notes exceptions: the right doesn’t apply when the contract is negotiated at the contractor’s place of business, and some service and repair contracts under $750 are handled differently (CSLB).
Mechanics liens, in one paragraph
If a subcontractor, supplier or worker on your project isn’t paid, they may be able to record a claim against your property. The CSLB explains that anyone who helps improve property and isn’t paid “may place what is called a mechanics lien on the property,” a claim “recorded with the county” (CSLB). Ask your contractor how subcontractors and suppliers are paid before you sign.
Permits
Work that needs a permit should have one. The CSLB advises: “Confirm that your contractor will obtain all necessary permits from your local building department” (CSLB brochure). Rules vary by city and county; our construction page links the local permit offices.
Quick checklist
| Before you sign | Why |
|---|---|
| License is active on the CSLB site | Confirms who you’re hiring and what they’re licensed for |
| Workers’ comp on file (if they have employees) | Required by law for contractors with employees |
| Three written bids and local references | Lets you compare scope, not just price |
| Written contract with license number | Required for home improvement work over $500 |
| Down payment no more than $1,000 or 10% | The legal limit, whichever is less |
| Payments follow the work | Never pay ahead of work done |
| Permits identified | Unpermitted work can cause problems later |
Sources
- CSLB: Finding the Right Contractor
- CSLB: Check a License
- CSLB: Homeowner Checklists
- CSLB: What Is a Contract?
- CSLB: Warnings and Exceptions
- CSLB: AB 2622 implementation bulletin
- CSLB: What You Should Know Before You Hire a Contractor
- Business and Professions Code §7048
- Business and Professions Code §7159
- Business and Professions Code §7159.5
- Civil Code §1689.6